Folwell Announces Millions in Savings for State Retirees

The North Carolina State Treasurer, on Tuesday, announced that benefits payments for state retirees will increase by a total of 5.7 million in January due to swift action by the state Retirement Systems Division (RSD).

Treasurer Dale Folwell said that the RSD beat out an Internal Revenue Service (IRS) deadline to file what federal taxes should be withheld from 2018 benefit payments to North Carolina retirees and benefit recipients that was the result of a new federal tax reform law.

Employers have until February 15, 2018 to update the federal withholding tables used to calculate how much is withheld from individual payments. The RSD Operations Team within the Department of the State Treasurer was able to update the tables ahead of the IRS’s deadline.

“I’m very proud of our team for taking the initiative so quickly after the new tax law was passed by Congress and signed by President Trump. While we are in the check delivery business, it involves more than just buying ink and stamps,” Folwell said. “This is a testament to the outstanding job that our career public servants do to serve government workers.”

Folwell said that North Carolina workers and retirees are continuing to benefit from new streamlined processes within the RSD to create operational efficiencies, including releasing 2017 tax forms weeks ahead of schedule and at the fastest pace in six years, despite a steady increase in retirements and new payment disbursements within the RSD.

As of now, more than $500 million is paid out each month to more than 312,000 retirees and benefit recipients.

“Our team, led by Tom Causey and Susan Fordham, decided not to wait until February to enact this increase in our members’ benefit payments,” said Steve Toole, executive director of RSD. “By updating these tax schedules sooner, our members will see larger January benefit payments.”

The State Treasurer manages the North Carolina Total Retirement Plans, which administer the retirement benefits of more than 900,000 of North Carolina’s state and local government, law enforcement, judicial and legislative employees, as well as teachers and fire and rescue workers.

Folwell also announced that the state pension plan reported gains of 13.5 percent for calendar year 2017, outperforming its past benchmark of 12.8 percent.

Pension fund assets were valued at $98.3 billion, an increase from $89.1 billion at the end of the 2016 calendar year.

Folwell made the announcement during his monthly “Ask Me Anything” phone call held with the media each month where he opens himself up to any questions from participating media.

“We are very pleased to see these gains at a time when the pension fund as a whole had less exposure to risk,” Folwell said. “Our investment management team, including interim Chief Investment Officers Chris Morris and Jeff Smith, has done an outstanding job of protecting and sustaining the pension plan on behalf of the public workers who rely on it during their retirement.”

Folwell said that his investment management team cut costs significantly in 2017 to provide more value to members of the pension plan.

During his first year as treasurer, fees paid to Wall Street investment managers were reduced by more than $60 million for a projected savings of $240 million over four years, exceeding Folwell’s pledge to cut fees by $100 million over his first four-year term.

The department also moved $100 million in passive indexing funds under in-house management in 2017 as a means of further reducing fees while maintaining performance.

The following 2017 performance figures were reported, already taking into account all fees and expenses:

· Public equity, which makes up almost 40 percent of the total fund, gained 24.4 percent